IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION DOROTHY THORNTON, SALLIE WEST, ) JACQUELINE WILLIS, LADONNA DUDLEY, )

POLLYANN McDONALD, PENNY OTTENS, ) STACEY MELISSA MACKEY, ROSA SMITH, )

LORETTA STONE, and DERICK RICHARD, ) )

Plaintiffs, ) No. 99 C 7435

)

vs. )

)

THE UNITED STATES DEPARTMENT )

OF HOUSING AND URBAN ) Honorable David H. Coar

DEVELOPMENT (“HUD”); and )

ANDREW CUOMO, in his official capacity )

as Secretary of HUD, )

)

Defendants. )

PLAINTIFFS’ MOTION FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION

Now come the plaintiffs, by and through their attorneys, the Legal Assistance Foundation of Chicago and the National Center on Poverty Law, and, pursuant to Fed. R. Civ. Proc. 65, move this Court to enter a temporary restraining order and preliminary injunction enjoining the United States Department of Housing and Urban Development (“HUD”) from disposing of two federally-subsidized multifamily housing projects standing at 7732-42 North Paulina & 1709-1711 West Juneway Terrace (“Juneway Commons”) and 1714-24 West Jonquil (“Jonquil Terrace”) by selling them to the Hispanic Housing Development Corporation (“Hispanic Housing”) before complying with its [HUD’s]

obligations under federal law. In support of this motion, Plaintiffs state the following:

The Standard For Ruling On A Request For A Preliminary Injunction

1. In order to obtain a preliminary injunction, Plaintiffs must demonstrate that (a) they have a likelihood of succeeding on the merits, (b) they will be irreparably harmed if their request for an injunction is denied, (c) this harm outweighs whatever harm Defendants will suffer if the request for an injunction is granted, (d) they have no adequate remedy at law, and (e) issuing the injunction will not harm the public interest. Roland Machinery Co. v. Dresser Industries, 749 F.2d 380, 386-88 (7

Cir.

1984).

2. The Court of Appeals in this circuit has taken a “sliding scale” approach to the process of determining whether a movant has satisfied the necessary elements for obtaining an injunction.

Roland, 749 F.2d at 387-88. For instance, if the movant can demonstrate a strong likelihood of success on the merits, she need not establish that the balance of harms weighs so heavily in her favor.

Id. Conversely, a movant who faces great harm need not demonstrate such a strong likelihood of

succeeding on the merits. See Green River Bottling Co. v. Green River Corp., 997 F.2d 359, 361 (7

Cir. 1993) (if the balance of harms weighs heavily in its favor, a movant is entitled to a preliminary injunction even if it has only a modest chance of prevailing on the merits).

The Standard For Ruling On A Request For A Temporary Restraining Order

3. The purpose of a temporary restraining order is to preserve the status quo until the

parties may be heard on a motion for a preliminary injunction. See W RIGHT , M ILLER & K ANE ,

F EDERAL P RACTICE AND P ROCEDURE , § 2951 (2d ed. 1995).

4. In deciding whether to issue a temporary restraining order, the court must consider (in addition to the factors it considers when ruling on a motion for a preliminary injunction) whether the movant risks immediate injury. Id.

Statement Of Facts

5. Plaintiffs incorporate by reference the facts set forth in ¶¶ 1-12 and 15-44 of their Verified Complaint.

6. In ¶ 45 of their Verified Complaint, Plaintiffs alleged that HUD had not complied with § 1701z-11(e) of the Multifamily Housing Property Disposition Reform Act of 1994 (“Disposition Act”), which states that HUD may not dispose of a multifamily housing project and provide the displaced residents with Section 8 tenant-based assistance unless it first “determines that there is in the area an adequate supply of habitable, affordable housing for very low-income families and other low income families using tenant-based assistance.” While noting that HUD had co-sponsored an unreleased rental market analysis, Plaintiffs stated that they believed this study would show there is not an adequate supply of suitable housing available in the area to very-low income families using Section 8 tenant-based assistance.

7. The study that HUD co-sponsored was finally released on November 23, 1999. It is

entitled For Rent: Housing Options in the Chicago Region, November 1999 (“For Rent”), and is

available at the Metropolitan Planning Council’s website (www.metroplanning.org). (It is also attached

as Exhibit A.)

8. This study – a summary of the six-county metropolitan region’s most current and comprehensive rental market analysis – confirms that there is a shortage of habitable, affordable rental housing in the region. Exhibit A, at 73.

9. The study shows that the overall vacancy rate in the region is 4.2%, which is

significantly lower than the 6% threshold HUD uses to indicate a tight housing market. Exhibit A, at 24.

(According to HUD’s own guidelines, Section 8 project-based developments located in tight markets should remain project-based. Id. at n.36, citing, HUD’s Mark to Market Operating Procedures Guide (April 1999).)

10. The study also identified, as a key concern, the loss of permanent affordable housing units as the residents of Section 8 project-based developments (such as the ones in which Plaintiffs reside) are provided with tenant-based assistance in the form of Section 8 vouchers. Exhibit A, at 40- 41.

11. The study noted that Section 8 voucher-holders will have an especially hard time finding housing for the following reasons:

(a) They can only move into units that have reasonable rents and meet the federal housing quality standards (“HQS”). Therefore, the number of vacant units from which they can select is less than the total number of available units. (In

Chicago, it is significantly less because 28% of all rental units fail to meet HQS.) (b) The Section 8 program is not attractive to most landlords (except those who

own properties in rental markets with higher-than-average vacancy rates and

lower-than-average rents). Exhibit A, at 53.

(c) Section 8 voucher-holders are often the victims of illegal discrimination. Exhibit A, at 54.

(d) During the next five years, the Chicago Housing Authority intends to issue approximately 6,150 vouchers to public housing residents who live in highrises that are slated for demolition. Exhibit A, at 40, 53. Furthermore, as many as 10,000 project-based subsidies may be converted to tenant-based assistance.

Id. at 40-41. This will increase competition among Section 8 voucher-holders, and greatly exacerbate the problems they encounter in finding a suitable unit.

12. The study suggests that the supply of affordable housing could be increased by

“creating project-based subsidies from the region’s pool of tenant-based housing vouchers.” Exhibit A, at 51.

13. The study notes that the local housing market is “characterized by extreme racial segregation and concentrations of poverty.” Exhibit A, at 65.

14. In Chicago, the vast majority of renters receiving Section 8 tenant-based assistance live in racially segregated, high poverty areas. Exhibit A, at 66-67, 70.

15. Research suggests that most new Section 8 voucher-holders will move to these same areas. Exhibit A, at 68-69.

16. CHAC has already issued Section 8 vouchers to all the plaintiffs. (See Plaintiffs’

affidavits, attached as Group Exhibit B.)

17. These vouchers are set to expire 120 days after the date on which they were issued.

18. Plaintiffs incorporate by reference the facts set forth in ¶¶ 46-54 of their Verified Complaint.

Plaintiffs Enjoy A Strong Likelihood Of Success On The Merits Of Their Claims Under The APA and Disposition Act

19. The Administrative Procedure Act provides that a reviewing court shall hold unlawful and set aside any action a federal agency takes without observing the procedure required by law. 5 U.S.C. § 706(2)(D).

20. The Disposition Act clearly provides that when HUD wants to dispose of a multifamily housing project and provide the displaced residents with Section 8 tenant-based assistance, it must first determine that there exists in the area an adequate supply of habitable and affordable housing for families who are using such assistance. 12 U.S.C. § 1701z-11(e)(2)(A).

21. To be habitable, a unit must comply with the federally mandated housing quality standards set forth in 24 C.F.R. § 982.401.

22. To be affordable, the total rent demanded by the owner must be reasonable. See 24 C.F.R. § 982.503.

23. There does not exist in the area an adequate supply of habitable and affordable housing for Plaintiffs. See Exhibit A.

24. HUD’s decision, therefore, to dispose of Juneway Commons and Jonquil Terrace and provide Plaintiffs with Section 8 vouchers is unlawful and must be set aside.

Plaintiffs Enjoy A Strong Likelihood Of Success On The Merits

Of Their Claims Under The APA and Fair Housing Act

25. The Administrative Procedure Act provides that a reviewing court shall hold unlawful and set aside any action a federal agency takes that is not in accordance with law. 5 U.S.C. § 706(2)(A).

26. The Fair Housing Act instructs HUD to administer its programs so as to affirmatively further fair housing. 42 U.S.C. § 3608(e)(5).

27. Accordingly, it imposes on HUD an obligation to not only refrain from engaging in racial discrimination, but to actually promote racial integration in housing. N.A.A.C.P. v. Secretary of

Housing & Urban Development, 817 F.2d 149, 154-55 (1st Cir. 1987); see also Trafficante v.

Metropolitan Life Insurance Co., 409 U.S. 205, 211, 93 S. Ct. 364, 367, 34 L. Ed.2d 415 (1972) (stating that the FHA’s goal is to create “‘truly integrated and balanced living patterns’”) (citation omitted); Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99 S. Ct. 1601, 60 L. Ed.2d 66 (1979) (finding that plaintiffs had standing to sue under the FHA even though their only claim of injury was the denial of the benefits of an integrated community).

28. With respect to the Section 8 program in particular, the Seventh Circuit has found that the FHA “imposes on HUD a substantive obligation to promote racial and economic integration . . . .”

Alschuler v. Department of Housing and Urban Development, 686 F.2d 472, 482 (7

Cir. 1982).

29. The buildings in which Plaintiffs currently reside are located in a racially integrated neighborhood.

30. HUD’s decision to dispose of these buildings and provide Plaintiffs with Section 8

tenant-based assistance will likely perpetuate racial segregation, because it will force Plaintiffs to move

out of their racially integrated neighborhood and into segregated communities.

31. HUD’s decision is not in accordance with its federal mandate to affirmatively further fair housing, and should therefore be declared unlawful and set aside.

Plaintiffs Will Suffer Immediate And Irreparable Harm If Their Request For An Injunction Is Denied

32. On information and belief, HUD has already sent Hispanic Housing contracts for the purchase of the Juneway and Jonquil projects. The sale of these projects, therefore, is imminent.

33. Once the sale occurs, Plaintiffs will have no choice but to use their Section 8 vouchers to search for suitable units in the private housing market.

34. Since most Section 8 voucher-holders end up living in racially segregated communities, Plaintiffs will most likely have to move out of their racially integrated neighborhood (where they have lived for many years and established important connections with their neighbors, schools and/or churches) and into a racially segregated area.

35. Furthermore, Plaintiffs face the very real possibility that they may not find suitable housing at all before their vouchers expire. See Exhibit A, at 41, citing, In Search of Shelter: The Growing Shortage of Affordable Rental Housing, Center on Budget and Policy Priorities (June 15, 1998) (finding that in the Chicago Metropolitan area, 245,000 low-income renters compete for only 115,000 low-cost rental units). If that happens, they will lose their Section 8 rental assistance, which is a very low-income family’s principal protection against homelessness.

The Balance Of Harms Weighs Heavily In Plaintiffs’ Favor

36. If their request for an injunction is denied, Plaintiffs will most likely have to move out of the racially integrated community where they have established long-standing connections. They will also face the very real possibility of not being able to locate a suitable new unit (inside or outside a racially segregated community) before their Section 8 vouchers expire, and therefore losing their rental assistance.

37. If Plaintiffs’ request for an injunction is granted, Defendants will not be harmed. They will still be able to sell the Juneway and Jonquil projects to Hispanic Housing or another purchaser; they just will not be able to force Plaintiffs to move out of the neighborhood. Instead of providing Plaintiffs with Section 8 vouchers and instructing them to search for suitable housing in the private market, Defendants will have to (a) provide project-based assistance for the units in these projects, (b) impose project-based Section 8 or rent restriction requirements on an equal number of units in other,

unsubsidized units in the local housing market, or (c) impose rent and use restrictions (running for the useful life of the projects) on the Juneway and Jonquil units and provide Section 8 tenant-based assistance to those Plaintiffs who need such assistance to afford these units. See 12 U.S.C. § 1701z- 11(e).

Plaintiffs Have No Adequate Remedy At Law

38. A plaintiff has no adequate remedy at law if an award of damages would be seriously deficient as a remedy for the harm suffered. Roland, 749 F.2d at 386.

39. A damages remedy is seriously deficient if “[t]he nature of the plaintiff’s loss may make

damages very difficult to calculate.” Id.

40. In this case, Plaintiffs face losing the benefits of living in a racially integrated community where they have established long-standing connections.

41. The nature of this loss make damages very difficult to calculate. Furthermore, damages cannot adequately compensate Plaintiffs for this loss.

Issuing The Injunction Will Not Harm The Public Interest

42. Issuing the injunction will preserve affordable housing for very-low income families.

43. It will also force HUD to comply with its obligations under the Fair Housing Act, which was designed to “fulfill, as much as possible, the goal of open, integrated residential housing patterns and to prevent the increase, in ghettos, of racial groups whose lack of opportunities the Act was designed to combat.” Otero v. New York City Housing Authority, 484 F.2d 1122, 1134 (2d Cir.

1973) (emphasis added).

44. Issuing the injunction, therefore, can only serve the public interest.

Plaintiffs Should Not Be Required To Post A Bond

45. Because Plaintiffs are indigent, they cannot afford to post a bond as security for the issuance of a temporary restraining order and preliminary injunction. Therefore, if this Court issues such an order or injunction, it will be appropriate to dispense with the security requirement set forth in Fed.

R. Civ. Proc. 65(c). See W RIGHT , M ILLER & K ANE , F EDERAL P RACTICE AND P ROCEDURE , § 2954 (2d ed. 1995); see also Wayne Chemical, Inc. v. Columbus Agency Service Corp., 567 F.2d 692, 701 (7

Cir. 1977) (plaintiff’s indigence justified court’s decision to waive the bond requirement);

Walker v. Pierce, 665 F. Supp. 831, 833-44 (N.D. Cal. 1987) (in suit brought on behalf of mostly

indigent residents of HUD-subsidized housing who were trying to enjoin HUD from selling mortgages, court waived security requirement because imposing such a requirement would have effectively prevented plaintiffs from obtaining judicial review of HUD’s actions).

WHEREFORE, Plaintiffs respectfully request that this Honorable Court:

A. Enter a temporary restraining order and preliminary injunction enjoining HUD from disposing of Juneway Commons and Jonquil Terrace by selling these projects to Hispanic Housing, or any other purchaser, until HUD complies with its obligations under both the Disposition Act and the Fair Housing Act;

B. Enjoin Defendants from failing to negotiate and consult with Plaintiffs about Plaintiffs’

proposal to convert the Jonquil and Juneway projects into affordable cooperatives.

C. Enjoin HUD from failing to suspend the terms of Plaintiffs’ Section 8 vouchers until this suit is resolved;

D. Enter an order stating that Plaintiffs shall not be required to post bond as security for the

issuance of this injunction; and

E. Grant such other relief as this Court deems proper and just.

Respectfully submitted,

One of the attorneys for Plaintiffs

LAWRENCE D. WOOD

Legal Assistance Foundation of Chicago Housing Law Project

111 West Jackson Boulevard, 3

floor Chicago, Illinois 60604

Tel: 312/347-8355 Fax: 312/341-1041

DAVID E. HARACZ DANIEL P. LINDSEY

Legal Assistance Foundation of Chicago National Center on Poverty Law

Northwest Office 205 West Monroe, 2

floor

1212 North Ashland Avenue Chicago, Illinois 60606

Chicago Illinois 60622 Tel: 312/263-3830 ext. 232

Tel: 773/489-6800 Fax: 773/489-4728 Fax: 312/263-3846